Reporting a consolidated net profit of Rs.212.12 crore for the last quarter of FY2020-21 against a net loss of Rs.68.59 crore in the year prior to this, Bharat Forge, an automotive, defense, and aerospace components supplier are confident of strong growth on the basis of an encouraging rebound in export markets. Said to expect robust demand in major export segments such as CVs, construction and mining, and oil and gas, the company looks well poised to tide over the current weakness in the domestic market, according to industry sources.
Drawing attention to CV majors like Volvo, Daimler, and Paccar providing positive demand commentaries and the 2021 calendar year forecast of retail units in North America and Europe being raised by at least 10 percent post a sharp downturn seen in the 2020 calendar year, sources mention that a strong demand rebound in medium and heavy-duty commercial vehicles in Europe and North American market will help Bharat Forge gain good export traction. Claimed to maintain a positive outlook for the M&HCV segment thus on the back of infrastructure spending and government’s focus on increasing manufacturing share in GDP, PLI schemes, scrappage policy, etc., Bharat Forge is known to explore opportunities in the aluminum space after the commencement of operations at its Nellore plant.
Witnessing a rise in consolidated revenue from operations at 19.57 percent to Rs.2082.85 crore for the fourth quarter ending March 2021 as compared to the consolidated revenue earning of over Rs.1741.92 crore in the same period a year ago, the company has secured an order for the development and supply of defense components. Becoming its 100 percent subsidiary, Kalyani Strategic Systems is well-poised to help Bharat Forge meet eligibility criteria for defense contracts. The pandemic in the first quarter of last fiscal causing temporary disruption, Bharat Forge is concentrating on budgetary support and eliminating any slack in physical interactions with buyers that may have been created. With several successful artillery and vehicle trials by its side, the company is keen to take its cooperation with its clients in the defense space to the next level. Said to follow a three-horizon strategy that involves artillery guns, armored vehicles, and specialty vehicles as products; some other types of specialty vehicles as products, and electronics and high-end tech as the third line, Bharat Forge is eyeing a significant chunk of business from the Indian Army as part of the ‘Atmanirbhar Bharat’ policy.
Set to benefit from the local manufacture initiative by the Defence Ministry that imposes restrictions on the import of certain weapons and specialized artillery equipment, the company has seen its aerospace business get impacted because of the fall in demand for global and regional air travel due to the pandemic. Investing Rs.0.01 million to acquire a 100 percent stake in Kalyani Powertrain Private Limited with an aim to undertake various initiatives in the field of e-mobility, the Bharat Forge makes airframes, structural, aircraft turbines, fan blades, landing-gear components, compressors, and engine parts for the aerospace industry. Acquiring 70 hectares of land at Khed for around Rs2.4 billion, the company is confident of making positive progress on the aerospace front as growth returns to the aviation sector. Claimed to have restrained from doing much CAPEX in FY2020-21, Bharat Forge has emerged as a successful bidder for Sanghvi Forgings. Keen to see a significant uptick in defense and e-mobility activities, the company is exploring new segments such as renewable energy, and metals, and mining. With an EBITDA percentage increase of 310 bps despite cost inflationary pressures, Bharat Forge is well-poised for upgrading its industrial manufacturing capabilities with the acquisition of Vadodara-based Sanghvi Forgings. Well aware of the spate of changes in regulations coupled with deteriorating fundamentals of the underlying economy led to torrid times for the automotive industry, the company is continuing to identify and address the new opportunities in the domestic automotive industry.
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